Considered in Grand Committee
That the Grand Committee do report to the House that it has considered the European Communities (Definition of Treaties) (Cariforum Economic Partnership Agreement) Order 2009.
Relevant document: 16th Report from the Joint Committee on Statutory Instruments.
The Cariforum EPA will bring together 14—soon, we hope, 15—Caribbean nations with the European Union to promote development-friendly trade. It means that the Caribbean countries will receive duty-free, quota-free access to EU markets. Without it, some countries have faced tariffs on up to 25 per cent of their exports, including on critical industries such as bananas.
The EPA allows the Caribbean countries to remove their own tariffs gradually, over 25 years, and contains safeguards so that they can protect infant industries and prevent import surges. It also—at the Caribbean’s request—includes provisions on services. Services are a key opportunity for growth in the Caribbean, particularly in tourism, leisure and the creative industries. No nation can achieve prosperity by closing its borders to trade. In the World Bank’s Global Monitoring Report 2008, it was calculated that removing all trade tariffs can reduce the headcount poverty index by 5 to 6.5 percentage points over a 10-year period.
I would like to quote the honourable Bruce Golding, the Prime Minister of Jamaica, who a month ago spoke publicly in support of the EPA. He said that the Caribbean’s hopes for growth are inextricably tied to trade and to its ability to penetrate and maintain markets where the demand is exponentially greater than Caribbean countries will ever be able to create themselves. What he said is equally true of the UK. The benefits from duty-free, quota-free access and from improved rules of origin are where the EPA will most quickly bring benefits.
The Dominican Republic is already moving to exploit previously enhanced market access for cocoa, bananas and textiles. However, in the longer term, the biggest benefits will come from the regional integration that will flow from all countries in a region signing.
This financial year, the Department for International Development has invested £5 million into a new trust fund known as CARTFUND to increase growth and deepen economic integration. To secure these benefits for the Caribbean we need to ratify the EPA. By agreeing to the order today, the Committee will be allowing us to proceed.
I thank the Minister for introducing the order. It is welcome news that 14 Caribbean nations and, we hope in due course, a 15th, will have duty-free access to EU markets. I have a few comments and questions for the Minister. First, does he have an anticipated date on which he expects Haiti to sign to make it a total of 15 countries? Perhaps he can expand on why he is confident that Haiti will indeed sign. Does the treaty come into effect whether or not Haiti signs?
Secondly, there was a debate in the other place on Monday about why no impact assessment had been produced. The Minister there admitted that none had been produced, but said that the Government have worked with Caribbean countries and with their partners in the Commission to ensure that they assess the impact of provisions concerning the organisation of EPAs. I shall not ask the Minister to set out the results of that now, but it would be helpful to noble Lords if he were to write to those taking part in this debate explaining in detail that assessment of the impact of the order.
Thirdly, Christian Aid has written to the Merits Committee, as the Minister will well know, saying that it believes that the likely results of the EPAs will be negative for the developing countries involved. Although the Caribbean nations have signed the EPA, it believes it should be renegotiated to reflect the development needs of the Caribbean. Could the Minister address the issues raised in its letter?
Lastly, there are a number of questions about the EPA and the WTO. While the Cotonou agreement, which preceded this agreement, was deemed non-WTO compatible, this agreement is said to be compatible. Can the Minister say what brought about the reconciliation? The need for small, under-resourced Caribbean nations to engage in the time-consuming negotiation process while dealing with the WTO process has made life extremely difficult for some of them, especially in terms of physical negotiating capacity. Does he have a response to the suggestion that bilateral agreements of this kind are an unwelcome distraction from a further Doha round?
I thank the Minister for proposing this order and welcome it from these Benches. I join in the questions asked by the noble Lord, Lord De Mauley, and hope for answers on the three points that he made. This is the end of a lengthy and somewhat painful process of negotiation, for the reality is always that moving from high protectionism to free trade is normally much easier for advanced countries than for less developed countries, particularly countries with very small Administrations, as has already been mentioned. It has taken quite a long time. We remember the very bitter criticisms of the President of Guyana last year, and there were objections from other countries as well. There were considerable discussions about the speed of opening of the Caribbean markets and other matters. None the less, these Benches welcome the agreement.
The EU Commission was very upbeat when the agreement was concluded, emphasising that the order was opening up complete front access to EU markets for Caribbean exports. In return, penetration into those Caribbean countries by exports from the EU would be over a long period to allow them time to adjust. The EPA allows Caribbean markets to protect sensitive sectors and local jobs where necessary. The service sector is also included, and the Minister might like to say something briefly about that because the EPA does not relate just to physical trade. The co-operation and innovation programmes are bound to be important for developing countries. Helping Caribbean countries meet exacting EU and international standards for foreign trade merchandise is a key part of this agreement, and perhaps the Minister will refer to that. Can he let us know the latest position on these matters with Cuba? I repeat the welcome of these Benches for this order.
We are fairly confident that Haiti will sign, because we believe that it has a vested interest in doing so. The order will come into effect if Haiti does not sign; but if it does not, we would need to amend the order as a result.
In relation to an impact assessment, a Caribbean study published this year found that the EPA would boost productivity and cause the economy and standard of living to rise by a few percentage points. It concluded that the ultimate effect on the domestic economy would be tiny and that the loss of tariff revenue would be compensated for by a small increase in indirect taxes.
On Christian Aid’s view that there would be negative impact, and with regard to the WTO, we cannot go back to that. The existing agreement was not compatible, whereas this agreement is, and we believe that it is a fair deal. As I said in my opening contribution, it allows the Caribbean countries to remove their own tariffs gradually over 25 years and contains safeguards so that they can protect infant industries, as mentioned by the noble Lord, Lord Dykes, and prevent import surges. Also, at the Caribbean's request, it includes provisions on services. Services are seen as a key opportunity for growth in the Caribbean, particularly in tourism, leisure and the creative industries. The agreement establishes a free-trade area by substantially liberalising all trade. We liberalise 100 per cent and the Caribbean liberalises 80 per cent, so we think that that is a reasonable balance.
We funded the Caribbean regional negotiating machinery to help negotiations—the noble Lord, Lord Dykes, or the noble Lord, Lord De Mauley, raised that point. However, we definitely gave assistance to help negotiations. The fact that 14 Caribbean countries signed is an indication of their support for the agreement. Cuba is not involved at all. The EU is also giving more than €150 million in aid to the Caribbean and we will provide something like 15 per cent of that.
I do not think that I have covered bilateral agreements and distraction from Doha. The instantaneous answer provided by my team is that we are still committed to Doha. That is just for the interim, so to speak.